To declare war or not to, that was the question. John Whitehead knew he would have to make a decision soon. His competitors had already made theirs, and Goldman Sachs was coming under increasing pressure to declare its intentions. For years, Goldman had quietly competed with four other top-tier Wall Street investment banks for the business of America’s largest companies. All five banks had been successful enough to make their partners very wealthy.

Then Morgan Stanley fired the first shot in a new kind of warfare, agreeing in July 1974 to help International Nickel Co. launch a hostile takeover bid for Electric Storage Battery.1 The unthinkable—one company trying to seize the assets of another through financial force—had suddenly become possible. It didn’t take long for the fever to become contagious. Corporate executives across the nation were desperate. Many believed they were trapped: Either they took over another company or they faced being taken over. The stakes were enormous, and investment banking clients were willing to pay astronomical fees for help in launching hostile takeovers. Yet amid all the feverish takeover action, the partners at Goldman Sachs could only watch from the sidelines. Whitehead, the cochairman of the firm, hadn’t yet given the go-ahead for the firm to advise its own clients on how to launch hostile offers.

Whitehead knew that helping clients make hostile tender offers would be enormously lucrative. And anyone not taking part in the merger mania risked being relegated to the second tier of investment banking. Yet to Whitehead, it didn’t seem as if his competitors1